PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

Transcription

1 BUY CMP Target Price GULSHAN POLYOLS LTD Result Update (PARENT BASS): Q2 FY15 NOVEMBER 19 th 2014 ISIN: INE255D01016 Index Details Stock Data Sector Commodity Chemical BSE Code Face Value wk. High / Low (Rs.) /60.10 Volume (2wk. Avg.) 8767 Market Cap (Rs. in mn.) Annual Estimated Results (A*: Actual / E*: Estimated) YEARS FY14A FY15E FY16E Net Sales EBITDA Net Profit EPS P/E Shareholding Pattern (%) 1 Year Comparative Graph GULSHAN POLYOLS LIMITED BSE SENSEX SYNOPSIS Gulshan Polyols Ltd is engaged in manufacture of various Industrial Chemicals for Multiple Applications & initially engaged in sugar business, which later diversified in field of Industrial Chemicals. During the quarter, Gulshan Polyols Ltd recorded a 32.90% rise in revenue at Rs million against Rs million in the corresponding quarter of the previous year. During the quarter, PAT falls to Rs million against Rs million in the corresponding quarter of previous year. The successful replacement of imported PCC with the commissioning of the third On Site PCC plant at ITC, Tribeni, Kolkata. The Company commences the expansion of Grain processing Division at Muzaffarnagar for manufacturing variety of Starch Sugars. During the quarter, the Company starts export of turnkey projects for onsite pcc and WGCC plants in Bangladesh. Gulshan Polyols Ltd has declared lnterim 35%. The Company Launches own Brand "TIGER GOLD" whisky and Rum in the state of MP and plans to launch many brands in this segment to increase market share. Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 10% over 2013 to 2016E respectively. PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Gulshan Polyols Ltd Camphor and Allied Products Ltd Vishnu Chemicals Ltd Sree Rayalaseema Hi Strength Hyp Ltd

2 QUARTERLY HIGHLIGHTS (PARENT BASIS) Results updates- Q2 FY15, Gulshan Polyols Ltd is engaged in manufacture of various Industrial Chemicals for Multiple Applications & this group initially engaged in sugar business, reported its financial results for the quarter ended 30 th Sep Months Sep-14 Sep-13 % Change Net Sales PAT (3.59) EPS (3.59) EBITDA Gulshan Polyols Ltd, revenue for the quarter rose by 32.90% to Rs million from Rs million, when compared with the prior year period. Net profit decreased by 3.59% to Rs million from Rs million in Q2 FY14. EBDITA grew by 27.66% YOY from Rs million to Rs million in current September quarter. Reported earnings per share of the company stood at Rs a share during the quarter as against Rs over previous year period. Break up of Expenditure Break up of Expenditure Consumption of Raw Material Rs in Million Q2 FY15 Q2 FY Depreciation & Amortization Expense Manufacturing Expenses Other Expenditure Employee Benefit Expenses

3 Latest Updates The successful replacement of imported PCC with the commissioning of the third On Site PCC plant at ITC, Tribeni, Kolkata. Gulshan Polyols Ltd has declared lnterim 35% as on November 14, The Company commences the expansion of Grain processing Division at Muzaffarnagar for manufacturing variety of Starch Sugars. During the quarter, the Company starts export of turnkey projects for onsite pcc and WGCC plants in Bangladesh. The Company Launches own Brand "TIGER GOLD" whisky and Rum in the state of Mp and plans to launch many brands in this segment to increase market share. (H1 FY15) Net Sales of Rs million for six months ended on 30th September, 2014 against Rs million in previous year, year on year growth of 17.6% for H1. EBIDTA increases to Rs million in six months ended on 30 th September, 2O14, a rise of 16.1%, against Rs million in the previous year. COMPANY PROFILE Gulshan Polyols Ltd. (GPL) was incorporated, to take over the Sorbitol project from Gulshan Sugars & Chemicals Ltd.GSCL) in terms of scheme of Arrangement/ demerger. GPL has six manufacturing facilities spread across five states in India and an established sales-distribution network across the globe. Manufacturing facilities are built over 150 acres of total land area. GPL has commissioned 10MW co-gen Power Plants at its various locations and employees over 1500 people. Focus on quality is maintained through in-house microbiology laboratory, including HPLC equipment. The plant was set-up in 1996 in the State of Gujarat in the parent company i.e. Gulshan Sugars & Chemicals.The plant is equipped with International Quality Equipment and Technology having the largest capacity in India. The plant is capable to produce Crystalline and Non crystalline grade of Sorbitol which is a unique feature as compared to other domestic plants. The present installed capacity is Tones of Sorbitol.

4 Gulshan Group has diversified interests and is engaged in manufacture of various Industrial Chemicals for Multiple Applications in several companies. The Group was initially engaged in sugar business, which later diversified into the field of Industrial Chemicals. The Group set up its first Indigenous plant to produce Synthetic Fillers popularly known as Calcium Carbonate (Caco3) Precipitated and Activated in the State of Uttar Pradesh where the high quality Limestone is available in plenty in nearby area. Gulshan Polyols Ltd and Gulshan Sugars & Chemicals Ltd both jointly appointed Price Waterhouse Coopers (PWC) to carry out the valuation exercise and to suggest entitlement ratio upon amalgamation / merger of Gulshan Sugars & Chemicals Ltd with Gulshan Polyols Ltd. Products Calcium Carbonate (CaCO3) Gulshan Polyols Ltd produces over 19 grades of Calcium Carbonate (Precipitated, Activated, Ground and Wet) used in various industries. Four of GPL s facilities, spread across the country, are dedicated to manufacturing Calcium Carbonate with an integrated capacity of 1,05,000 MTPA. Facilities have in-house microbiology laboratory with extensive R & D facility and are backed by 7MW captive power plants. Sorbitol 70% It is one of the largest manufacturers of Sorbitol with a capacity of MTPA in India. GPL s Sorbitol 70% facility is ISO 9001:2008, HACCP, OU-Kosher and HALAL certified. It also meets IP, BP and USP grade specifications. Strict quality standards are maintained through in-house fully equipped QC & QA lab along with separate microbiology laboratory, equipped with latest HPLC machines. Liquid Glucose It has its Liquid Glucose manufacturing facility at Jhagadia Industrial Estate in Gujarat, with a total production capacity of 10,000 TPA. The facility is equipped with microbiology laboratory and follows strict quality control. Some of the major clients serviced by the company in the LG segment are Britannia Industries, Dabur, Candico, Times Food etc. Achievements GPL has an accreditation as ISO 9001:2000 certification.

5 Future Outlook GPL foresees India to become the global supply hub of Starch and Starch Derivatives. The company is increasing production of Sorbitol 70% and Liquid Glucose to cater to global demand. At the same time, it is developing production facility for Mannitol and Dextrose Monohydrate, to further enhance its reach in Specialty Polyols & Starch Derivatives.

6 FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions) Balance Sheet as at March31, E GULSHAN POLYOLS LTD FY13A FY14A FY15E FY16E EQUITY AND LIABILITIES: Shareholders Funds: Share Capital Reserves and Surplus a) Sub Total - Net worth Non-Current Liabilities: Long-term borrowings Deferred Tax Liabilities [Net] Other Long Term Liabilities b) Sub Total - Non Current Liabilities Current Liabilities: Short-term borrowings Trade Payables Other Current Liabilities Short Term Provisions c) Sub Total - Current Liabilities Total Liabilities (a+b+c) Non-Current Assets: Fixed Assets: i. Tangible Assets ii. Capital work-in-progress a) Sub Total - Total Fixed Assets b) Non-Current Investments c) Long Term Loans and Advances d) Sub Total - Non-Current Assets Current Assets: Current Investments Inventories Trade Receivables Cash and Bank Balances Short Term Loans and Advances e) Sub Total - Current Assets Total Assets (d+e)

7 Annual Profit & Loss Statement for the period of 2013 to 2016E Value(Rs.in.mn) FY13A FY14A FY15E FY16E Description 12m 12m 12m 12m Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross profit Depreciation Exceptional Items Profit Before Tax Tax Net Profit Equity capital Reserves Face value EPS Quarterly Profit & Loss Statement for the period of 31 st Mar, 2014 to 31 st Dec, 2014E Value(Rs.in.mn) 31-Mar Jun Sep Dec-14E Description 3m 3m 3m 3m Net sales Other income Total Income Expenditure Operating profit Interest Gross profit Depreciation Exceptional Items Profit Before Tax Tax Net Profit Equity capital Face value EPS

8 Ratio Analysis Particulars FY13A FY14A FY15E FY16E EPS (Rs.) EBITDA Margin (%) PBT Margin (%) PAT Margin (%) P/E Ratio (x) ROE (%) ROCE (%) Debt Equity Ratio EV/EBITDA (x) Book Value (Rs.) P/BV Charts

9 OUTLOOK AND CONCLUSION At the current market price of Rs , the stock P/E ratio is at 6.66 x FY15E and 5.80 x FY16E respectively. Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs and Rs respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 10% over 2013 to 2016E respectively. On the basis of EV/EBITDA, the stock trades at 3.96 x for FY15E and 3.51 x for FY16E. Price to Book Value of the stock is expected to be at 0.94 x and 0.81 x respectively for FY15E and FY16E. We recommend BUY in this particular scrip with a target price of Rs for Medium to Long term investment. INDUSTRY OVERVIEW The Company is engaged in the business of producing Sorbitol & Sweetener and Calcium Carbonate. Sorbitol is a water soluble polyhydric alcohol having sweet taste and high stability besides properties of humectancy and plasticizing. It finds application as input material in various industrial sectors such as Tooth Paste, Pharmaceuticals, Vitamin-C, Cosmetics, Paper and Paints etc. Calcium Carbonate (CaCO3) finds application as input material in various industrial sectors such as Tooth Paste, Pharmaceuticals, and PVC products, Rubber, Plastic, Polymer, Cable, Leather, Paper and Paints etc.

10 The Calcium Carbonate Industry comprises organized and un-organized sectors. The un-organized sector consists of small and tiny units which are out of the purview of paying Excise Duty etc. The Company is the one of the largest producer of Sorbitol and Calcium Carbonate in the Country in the organized sector, which meets the requirements of all the customers in the various industries, and the customer's list includes top corporations in Tooth Paste, Pharmaceuticals, Paperand Paints etc. The consumer industry i.e. Tooth Paste, Pharma, Cosmetic, Paint etc have shown growth which may lead to further improved business and margins to the company. Turnover of the company has increased from Rs mn for the year ended 31st March, 2012 to Rs mn for the year ended 31st March, Outlook The outlook for Sorbitol and Calcium Carbonate industry is encouraging and dependent upon the growth of the consumer industry. Improvement in overall economic scenario and replacement of other costly products by Sorbitol and Calcium Carbonate holds the key for steep growth of Sorbitol and Calcium Carbonate industry. The growth in industrial output and increase in investment in core and infrastructure sector should improve the sentiments of Economy. The growth in other sectors would also follow which in turn would increase the prospects of the company. Together with the GDP growth, the Company expects a reasonably good demand growth from various quarters, which in turn would lift the company's future. Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but do not represent that it is accurate or complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it s affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provide for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision.

11 Firstcall India Equity Research: C.V.S.L.Kameswari Pharma U. Janaki Rao Capital Goods B. Anil Kumar Auto, IT & FMCG M. Vinayak Rao Diversified C. Bhagya Lakshmi Diversified B. Vasanthi Diversified G. Amarender Diversified Firstcall India also provides Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO s, QIP s, F.P.O s,takeover Offers, Offer for Sale and Buy Back Offerings. Corporate Finance Offerings include Foreign Currency Loan Syndications, Placement of Equity / Debt with multilateral organizations, Short Term Funds Management Debt & Equity, Working Capital Limits, Equity & Debt Syndications and Structured Deals. Corporate Advisory Offerings include Mergers & Acquisitions(domestic and cross-border), divestitures, spin-offs, valuation of business, corporate restructuring-capital and Debt, Turnkey Corporate Revival Planning & Execution, Project Financing, Venture capital, Private Equity and Financial Joint Ventures Firstcall India also provides Financial Advisory services with respect to raising of capital through FCCBs, GDRs, ADRs and listing of the same on International Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and other international stock exchanges. For Further Details Contact: 3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai Tel. : / / Telefax : info@firstcallindiaequity.com